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Filene Seeks Credit Unions to Test Trust Card Program

posted by Sharon Bahr
on Fri, 04/18/2014 - 9:41am

Millions of working Americans are in a cycle of debt that they have little hope of digging out of without an innovative product designed to help accelerate repayment and address cash flow. That’s why the Filene Research Institute is testing The Trust Card, a debt management program pioneered by Neighborhood Trust Federal Credit Union (NTFCU) and Neighborhood Trust Financial Partners, in their accessible financial services incubator funded by a Ford Foundation grant. Filene Research Institute is looking for credit unions to participate in an 18-month pilot program.

Its key features are designed to quickly eliminate unhealthy debt that is consolidated onto the Trust Card at fair, socially responsible rates, as well as provide a reasonable amount of credit that the member can access as needed. The program incorporates financial counseling, which creates a dialogue with members, encouraging them to assess their current situation, understand their choices and leaving them empowered to take control of their financial future. The counselor works with the member to determine their ability to pay, establishing a Rapid Repayment, a fixed monthly amount that fits within the member’s budget and saves them thousands of dollars in interest. They secure a Commitment Contract in which the member pledges to close their current lines of credit, not open new lines and agrees to ongoing monitoring of their credit utilization.

Since its trial rollout, NTFCU consolidated approximately $300,000 of debt for 45 Trust Card users, saving borrowers tens of thousands of dollars in interest payments and generating substantial revenue with zero charge-offs.

Credit unions are looking for the opportunity to gain wallet share among their current members and gain new members too. The Trust Card enables them to do both. Credit unions also operate on cooperative principles such as concern for community—helping in sustainable development of the communities they operate in by offering people of modest means products that make sense for them. Credit unions’ not-for-profit status makes them mission driven, and the Trust Card fits nicely with that mission!